Royalty Pharma Finance Trust’s $600 million term loan to fund future acquisitions rose in its first day of trading, according to Markit Group Ltd.
The debt, due in November 2018, began trading yesterday at 99.25 cents on the dollar, Markit prices show. That’s up from an issue price of 98.5 cents, according to data compiled by Bloomberg.
Bank of America Corp., Goldman Sachs Group Inc. and Citigroup Inc. arranged the financing for the New York-based company which acquires royalty interests in marketed and late stage biopharmaceutical products, the data show.
The loan pays interest at 3 percentage points more than the London interbank offered rate, with a 1 percent floor on the benchmark, Bloomberg data show. Libor, the rate at which banks say they can borrow in dollars from each other, serves as a reference for about $360 trillion of financial instruments worldwide.
Lenders are being offered one-year soft-call protection of 101 cents, meaning the New York-based company would have to pay 1 cent more than face value to refinance the loan during the first year, Bloomberg data show.
With the issuance of the new term loan, Royalty Pharma’s leverage, or debt to earnings before interest, taxes, depreciation and amortization will now be 3.5 times, up from 2.9 times, according to a May 24 company statement.
“We believe the robust execution and our ability to maintain the same borrowing spread underscores the strength of Royalty Pharma’s reputation in the debt market,” Pablo Legorreta, chief executive officer of Royalty Pharma, said in the statement. “From a long term perspective the overall cost of this debt financing is extremely attractive.”
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